March 5, 2007

 

CBOT Corn Outlook on Monday: Down 6-8 on tech, outside market weakness

 

 

Chicago Board of Trade corn futures are seen starting Monday's day session on the defensive, influenced by technical pressure and weakness in outside markets, analysts said.

 

Analysts expect corn to open 6 to 8 cents lower.

 

In overnight electronic trading, March corn ended 8 1/2 cents lower at US$4.02 1/2, May corn finished 7 3/4 cents lower at US$4.13 1/4, and December corn was 6 3/4 cents lower at US$4.00.

 

The overnight theme will set the stage for early price action, with world stock markets coupled with declines in metals and energy futures expected to attract further long liquidation pressure, a CBOT floor analyst said.

 

The absence of fresh fundamental news will keep technical features in play, with the trade keying on outside market movement for indications of speculative fund activity, traders added. However, after heavy losses in the past week, traders will keep a close eye out for the exhaustion of downside movement, with supportive long range fundamental outlooks seen keeping a floor under prices, a trader said.

 

A technical analyst said market bears have gained some fresh downside technical momentum with last week's price action. Also, the recent higher volatility at higher price levels is a bearish technical warning signal of a near-term market top. It will take a price move above US$4.38 basis May futures to fill a downside price gap and repair last week's near-term chart damage. The next downside price objective is producing a close below solid chart support at last week's low of 4.17.

 

First resistance for March corn is seen at US$4.25 and then at US$4.30. First support is seen at US$4.17 and then at US$4.15.

 

The Commodity Futures Trading Commission on Friday reported in its supplemental commitment of traders report that index funds were reported to hold net long positions totaling 361,720 combined corn futures and options contracts as of Feb. 27, up from 353,069 the prior week. Traditional large speculative traders were net long 311,992 contracts compared with net longs of 312,921 in the previous week. Commercials were reported to hold net short combined futures and options positions totaling 600,809 contracts, down from the previous week's 606,201 contracts.

 

On tap for Monday, the USDA is scheduled to release its weekly export inspection report at 11 a.m. EST.

 

U.S. Midwest cash corn basis bids were mostly steady Monday, cash traders said. Spot U.S. cash corn bids were up 4 cents in Cedar Rapids, IA., and up 1-cent in Evansville, Ind.

 

In deliveries, a total of 129 notices were placed against the CBOT March future. The last trade date assigned was February 22. A customer account at Man Financial was the primary issuer of 96 lots, with stoppers scattered among various commission houses.

 

The DTN Meteorlogix Weather Service forecast said a more favorable weather pattern is in store for transportation during the week in the western Midwest. In the eastern belt, colder conditions are on tap during the week. Wet weather may redevelop in the southern areas later in the period but this is somewhat uncertain.

 

In overseas markets, corn futures traded on China's Dalian Commodity Exchange settled higher, getting support from the recent heavy snow in major corn-producing regions in northeast China, which made transporting corn difficult. The benchmark September corn contract settled RMB1 higher at RMB1,702/tonne.